Why Would a Seller Give a Buyer Credit?

Here’s what you need to know about sellers paying buyers’ closing costs.


Recently, I’ve received a lot of questions about sellers’ closing costs. Are sellers giving buyers credits at closing? Let’s talk about it. 

Not too long ago, it was common for a buyer to ask a seller to pay a portion of the buyer’s closing costs. If a buyer is purchasing the home with an FHA loan, they may not have a ton of cash to pay for their closing costs, which typically run about two or three percent of the total cost of the home. In this case, the buyer could add the costs to the price, then ask the seller to help them pay. This is a great strategy for first-time buyers. 

“As long as everyone is on the same page, both parties almost always work something out.”


Why does this matter today? There are two main places you negotiate what closing costs the seller will pay: when you write the offer and when something comes up during the inspection. If something goes wrong in the inspection, the buyer can ask the seller for a credit. This way, the seller doesn’t have to go through the hassle of fixing it themselves, the buyer doesn’t have to pay for the repair, and the sale can continue without a hitch. 

The issue arises when loans become involved. Some loans have strict rules about the amount of closing costs a seller can pay on a buyer’s behalf. There are also rules about what happens to a seller’s contribution if you don’t use it; usually, you end up losing it. This is why it’s so important to communicate with your agent and your lender about closing costs. As long as everyone is on the same page, both parties almost always work something out. 

If you have any questions about today’s video, please feel free to call or email me. I am always willing to help!